Let’s look at 2020 housing and mortgage market predictions. These stats change monthly, and I’ll keep updating them for you. Below are these key stats and why they matter: home sales, home prices, new home construction, mortgage rates, and size of U.S. mortgage market in 2020.
The housing market is healthy, and image above shows the three-year outlook is pretty good too. Not scorching but steady, which best for avoiding boom and bust cycles.
SIZE OF U.S. MORTGAGE MARKET IN 2020 IS $11 TRILLION
– In 2020, the size of the U.S. mortgage market is $11.05 trillion as measured by outstanding mortgages.
– And there will be $1.91 trillion new mortgages funded in 2020.
– This is down slightly from $2.07 trillion from 2019 because refinances from the 2019 rate dip will wane.
– But also home purchase mortgages (as opposed to refinances) will increase from $1.27 trillion in 2019 to $1.31 trillion in 2020.
– This is positive as most of the mortgage volume is from people buying (as opposed to refinancing) homes.
6.24 MILLION HOME SALES IN 2020
– There will be about 6.24 million home sales in 2020.
– This total is comprised of about 5.52 million sales of existing homes, and 726,000 sales of newly constructed homes.
NEW & EXISTING HOME PRICES IN 2020: $326,200 & $279,400
– The median price of a new home at this moment in 2020 is $326,200.
– If you put 10% down on a home of this price, your monthly payment would be $1871.
– And the median price of an existing home at this moment in 2020 is $279,400.
– If you put 10% down on a home of this price, your monthly payment would be $1619.
– This assumes today’s 30-year fixed rate of 3.75% and mortgage payment, taxes, insurance, and mortgage insurance.
MORTGAGE RATES WILL AVERAGE 3.7% IN 2020
– As you see from the previous section, today’s 30-year fixed rate is 3.75%.
– The MBA predicts — for now — that rates will remain at this level for 2020.
– But it’s an election year, we’re entering what looks like a war right now.
– So rates will be volatile all year, but unrest and conflict usually means lower rates.
– And as I noted above, I’ll update this monthly.
1.3 MILLION NEW HOMES CONSTRUCTED IN 2020
– New construction and remodeling of single family and multifamily homes only contributes about 3-5% of GDP, but has broad ripple effects in the economy.
– Why? Because tons of materials must be bought to build homes. Lots of salaries must be paid to build them. And buyers must spend a lot to buy, move into, and furnish them.
– The item called Housing Starts on the table above and shows how many homes where construction has actually begun.
– It’s an important indicator because this is economic activity in motion, that will set off the ripple effects — as opposed to other indicators like building permits which don’t directly set spending wheels in motion.
– Housing starts are currently 1.36 million annualized, but the MBA’s 2020 prediction is now at 1.3 million.